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Monday, July 16, 2012

SMRT fined S$2m for December train disruptions

SINGAPORE: The Land
Transport Authority (LTA) will impose the maximum fine of S$2 million on
transport operator SMRT for the two train disruptions along the
North-South Line on December 15 and 17 last year.

Over 200,000 commuters were affected during the disruptions.

LTA
said its investigations have found that SMRT had failed to meet its
licensing obligations for the North-South and East-West Lines.

It
has failed, among other things, to exercise due diligence and vigilance
expected of a public transport operator, and to maintain its network in
good and efficient working condition.

In both incidents, SMRT
was also found to be in breach of the Operating Performance Standards
for the North-South and East-West lines.

Under Section 19 of the
Rapid Transit Systems Act, a public transport operator can be fined up
to S$1 million per incident if it fails to comply with the Operating
Performance Standards and other regulatory requirements.

In
assessing the penalty amount, LTA said it considers the facts of the
case, severity of the incident and any relevant mitigating factors that
may apply. It will also consider any representations which the operator
may make.

A statement from LTA said the S$2 million will be
donated to the Public Transport Fund to help needy families with
transport fares.

The penalty comes on the back of the Committee of Inquiry's report, which was submitted to the Transport Minister on July 3.

Chairman
of the Government Parliamentary Committee for Transport, Cedric Foo,
felt LTA is imposing the maximum fine as the disruptions had massive
impact on commuters and occurred in quick succession.

He said
"The disruptions in December has massive impact on commuters. They
occurred in quick succession and the COI found they were preventable.
That, I felt was why LTA meted out the maximum fines under the
framework."

Others felt the fine will send a clear signal to operators.

Associate
Professor Lee Der-Horng of the National University of Singapore said:
"Imposing the penalty is definitely the last option. I'm sure SMRT will
receive a very strong signal that they would definitely have to improve
-- right from the fundamentals to improve their service to ensure that
in the future, a similar incident will not happen again."

LTA is now reviewing the current maximum penalty amount following the disruptions, to strengthen its regulatory regime.

Dr
Park Byung Joon, Head of Urban Transport Management at UniSIM's School
of Business, said: "What I want to see from the LTA now is whether they
are going to introduce another fine for less major disruptions. Is LTA
going on a case-by-case basis like now? Or are they going to introduce a
more structured fine scheme?"

In a separate statement, SMRT said
it has been informed of the fine, and added that the investigations
into the incidents have provided the company with valuable insights into
enhancements needed in its previous maintenance regime, which was
regularly validated by LTA.

SMRT said since the two incidents, it
has been implementing various initiatives to prevent a recurrence, and
improve service reliability and incident response in collaboration with
LTA.

The operator said it will implement further improvements and
work closely with the LTA to enhance its reliability and service levels
for the benefit of commuters.

An analyst said that the penalty will send a message to operators that such incidents should not be repeated.

The
disruptions have already cost the private operator some S$4.4 million
in additional costs for financial year 2012. Part of this money went
towards legal and professional fees.

The company also reported a
lower full-year net profit of S$119.9 million for its fiscal year ending
March 30, 2012, which is 25.6 per cent lower than the previous year.